The pandemic strained and tested the worker-employer relationship beyond anyone’s anticipation. Going forward, thriving in an uncertain future depends on having a compelling vision for where that relationship should go.
“Shopify, like any other for-profit company, is not a family. The very idea is preposterous. You are born into a family. You never choose it, and they can’t un-family you. The dangers of ‘family thinking’ are that it becomes incredibly hard to let poor performers go. Shopify is a team, not a family.” -- Tobias Lütke, CEO, Shopify
Shopify reminded workers that they’re a business, not a family.1 Basecamp banned societal and political discussions at work.2 Fujitsu took the first steps to end “solo work” practices.3 Goldman Sachs came under fire for workers’ 100 hour weeks.4 And Danone set its sights on becoming the world’s largest B-Corp. Whatever you thought the worker-employer relationship was before, there’s no doubt that it is under stress and evolving now.
What’s less clear is what form it will take moving forward. How will the worker-employer relationship shift as employers and workers push and pull each other in the pursuit of their various needs? Will organizations continue to embrace their role as social enterprises? Will workers’ trust in business remain steadfast, or will they look for leadership outside of organizational walls?
This special report explores one set of possible answers to the central question: How might the worker-employer relationship evolve to meet the opportunities and challenges of the post–COVID-19 world?
In a world full of uncertainties, we’ve used scenario planning to explore the possible futures of the worker-employer relationship, seeking to challenge conventional wisdom, stretch our thinking and horizons, and chart a new course. The insights on the following pages leverage our scenario planning methodology and are fueled by research findings from a combination of social media polling, live survey polling, artificial intelligence (AI)–enabled focus groups, and interviews with business and HR executives across industries and workers all over the world.
The pandemic strained and tested the worker-employer relationship. Employers were called upon to support workers’ health, livelihoods, and dignity to an unprecedented degree, and their success—or failure—to do so came under unprecedented scrutiny. The result was that developments that might have played out over a period of many years were compressed into a matter of months.
Sometimes, these pressures yielded great benefits. Workers showed remarkable resilience and adaptability as they rose to the pandemic’s challenges, and with their employers’ support and mandate, they achieved innovative results that could otherwise have taken years to materialize. But many questions also arose about whether organizations were doing enough to support and safeguard their workers. People quickly pointed to organizations’ shortcomings in protecting workforce segments that were disproportionately impacted by the health crisis and pursuant economic downturn—young workers, who were most likely to be unemployed or underemployed;5 minority groups, whose labor force participation steeply declined; and women, whose employment was found to be 19% more at risk than men.6 Organizations also faced backlash for their role in encouraging high-pressure working conditions. Eighty-nine percent of workers in a February 2021 global Harvard Business Review study said that their work life was getting worse, 85% said that their well-being declined, and 56% said that their job demands had increased.7
Perhaps then it’s no surprise that we find ourselves in a moment of reflection. Workers are reconsidering everything from who they want to work for—with 40% of the global workforce considering leaving their employer this year8—to the role they expect employers to play in supporting their purpose and values. Likewise, organizations are contemplating their role in society and their relationship with their workers—with some leaning in and others backing away.
And while the worker-employer relationship may be top of mind for both workers and executives, they may not be aligned on how it will evolve. Sixty-three percent of the workers we surveyed in our research for this special report felt that their relationship with their employer will stay the same or become a stronger partnership, while 86% of executives told us they believe workers will gain greater independence and influence relative to their employers in the future.
Understanding how the worker-employer relationship could evolve begins with identifying which factors will have the greatest influence on the relationship moving forward. We used focus groups to get executives’ perspectives on what those factors could be, discussing possibilities such as economic growth, the use of technology in business, unexpected disasters, climate change, and social divides in access to resources such as education, wealth, and health. But beyond the rest, the two factors that stood out as being the most influential on the future of the worker-employer relationship in our research were talent supply and government impact.
Talent supply: How talent availability will influence how workers seek employment and how organizations access and retain them. The most evident impact of talent supply is the different actions that organizations or workers might take depending on how easy or difficult it is to get a job or secure an appropriately skilled worker. For instance, talent supply could influence whether organizations are likely to invest in reskilling; to what extent workers will seek changes in their employers or careers; how organizations could use the alternative workforce to access the skills and capabilities they need; and how heavily an organization might lean on technology to replace, augment, or collaborate with their workforce.
Talent supply is already a key concern and growing in importance. The pandemic exacerbated growing digital, education, and skilling divides around the globe—putting further strain on talent supply considerations and trends. In 2020, 80% of job losses were among the lowest quarter of wage earners, many of whom work in hard-hit sectors such as leisure and hospitality, government, and education.9 And a new study estimates that 100 million global low-wage workers will need to find a different occupation by 2030.10 At the same time, the demand for skilled workers is growing, with seven in 10 employers globally saying they are struggling to find workers with the right mix of technical skills and human capabilities.11
Government impact: How government action will affect workers’ and employers’ roles in the new world of work. In our research for this special report, government regulation rose to the top as the most influential external factor behind an organization’s and its workforce’s ability to thrive. The type, consistency, speed, and effectiveness of government action could all influence the worker-employer relationship. For instance, government effectiveness in driving social change, such as policies around worker representation or protection, or actions to address concerns such as climate change or social injustice, could shift workers’ expectations of their employers to attend to such issues. Public policy and regulation protecting jobs and wages, enhancing social safety nets and benefits, improving access to education, or investing in reskilling could decrease workers’ reliance on their employers for these things. And public policies that restrict or create an additional burden on organizations seeking to create work in new geographies, access talent across borders, or leverage alternative workforce segments could influence workforce planning and talent strategies.
We use these two factors, talent supply and government impact, to explore four potential futures that illustrate how the world of work and the worker-employer relationship could evolve:
These four futures are illustrative, not exhaustive. They can be either positive or negative, depending on the choices that workers and employers make. Organizations will likely find themselves in some combination of these futures depending on the needs and expectations of their workforce, their industry, their regions, and the communities in which they operate. The increased complexity of the world requires us to abandon “one-size-fits-all” views in lieu of a more nuanced approach and understanding.
The narrative that follows explores each possible future in detail and outlines the risks that succumbing to its pressures could raise. In each future we offer an instinctive response—the path we believe most organizations would take when faced with the dynamics and conditions of that world. But the instinctive response is just that—not a conscientious strategy.
The alternative to taking the instinctive route includes actions that can allow organizations to survive—the basic elements that must be in place for an employer to do well in each future. Organizations that embrace a survival mindset will be able to tread water—leveraging near-term strategies to navigate the future, with an expectation (or hope) that the world will revert to business as usual once external pressures cede. While survival strategies are important in the near term, they do not give an organization the tools they need to chart their own destiny for longer-term success.
Moving beyond a survive mindset to a thrive mindset requires a recognition that disruption is continuous rather than episodic, and a willingness to use disruption as a catalyst to drive the organization forward. The 15% of the 3,630 executives in our 2021 Global Human Capital Trends research who said their organization was very prepared for COVID-19 were already adopting a thrive mindset.12 This could be especially important as organizations consider the future of their relationship with workers, since those who adopted a thrive mindset were three times more likely than their peers to bring human strengths to the fore—leveraging worker adaptability and mobility to navigate disruption.
In these futures, you will read about how organizations can take a greater leap to ideas and practices that may seem unconventional or aspirational, but that can be essential to an organization’s ability to build purpose and meaning in work, unleash the potential of the workforce, and employ new perspectives.
As you read on, challenge yourself to avoid concluding that the coming years will accelerate the changes you already expected or believed were inevitable. Instead, imagine how the future might assume a different course—and how you might address the opportunities and challenges that future course might present. As Peter Drucker famously said: “The greatest danger in times of turbulence is not the turbulence itself, but to act with yesterday’s logic.”
In a “work as fashion” future, employers are in constant motion as they chase worker sentiments, competitor actions, and marketplace dynamics. The worker-employer relationship is REACTIVE: Employers feel compelled to respond in the moment to workers’ expressed preferences, and to competitor moves, without connecting those actions to a sustainable workforce strategy.
The “work as fashion” future is transitory and constantly changing. It’s akin to how brands introduce new clothing collections seasonally and cyclically, moving them rapidly from runway to retail to capture consumers’ fleeting attention and desires. It’s a self-perpetuating cycle in which the latest trends substitute for a sustained strategy. Even an employer’s stance on societal issues is used primarily as a way to attract, retain, and motivate workers, adopting the purpose that’s currently hot in a bid to keep the workforce engaged.
A “work as fashion” future could arise from the convergence of low talent supply and low government impact.
A low talent supply creates a seller’s market for workers, especially for skilled workers. Workers can base their choice of employer on what each is offering and how well those offerings meet their immediate desires. Employers, meanwhile, become acutely attuned to their workforce’s preferences, as well as what their competitors are doing, to compete for workers’ attention and approval. It’s a mirror image of the “war between talent” future, in which workers compete for employers’ attention and approval.
Low talent supply is already a reality in many industries and geographies today. A Korn Ferry analysis estimated a global talent deficit of 85.2 million workers by 2030, predicting a skills shortage that could result in US$8.452 trillion in unrealized annual revenue.13 Many companies large and small are struggling to find enough workers amid the economy’s rapid recovery from the pandemic-spawned recession.14 A recent study in Japan revealed that 79% of Japanese companies are concerned about the shortage of talent.15 In the United States, there were 8.1 million vacant job openings in March 2021—a record high. Further exacerbating the problem, the study showed that there were approximately half as many available workers per open job when compared to a historical 20-year average.16
Low government impact can also help create the conditions for this future. When government does not offer support what workers feel they need, such as access to health care, workplace protections, and reskilling opportunities, workers will expect employers to provide what they’re not getting elsewhere—and because they have the upper hand, they are in a position to demand it.
We see Work as Fashion as possibly 2021’s and 2022’s dominant future, especially in light of the hotly debated issue of the return to the workplace. A case in point: After initially planning to mandate an “office-first” environment as the pandemic subsides, Amazon now says that it will allow most office workers to work remotely two days a week. It’s likely that this move reflects the fact that flexibility has become “table stakes in tech, where competition for talent is always fierce.”17 These types of situations led a recent New York Times article to observe, “For the first time in a generation, workers are gaining the upper hand.”18
Navigating the “work as fashion” future
The instinctive response in a “work as fashion” future is to be highly responsive—constantly listening to workers and reacting at speed. But this approach can mislead employers into substituting responsiveness for a relationship. A productive long-term relationship between workers and employers must have a deeper basis than responding to the loudest and most recent voice. Transitory solutions can create several risks, including:
• What matters first may trump what matters most. Moving too quickly to address worker sentiment doesn’t allow employers time to explore deeper root causes behind workers’ expressed feelings and needs. For instance, if employers treat meaning and purpose mainly as attraction and retention tools, they may overlook that what workers are actually looking for is consistency and a more sustained commitment. They may also miss the opportunity to use purpose to cultivate belonging among the workforce and thereby improve their performance.
Despite the popularity over the past decade of bringing ping pong tables into the workplace as a means to build a fun workplace culture, less than a quarter of millennials surveyed at the height of this trend said that an informal work environment is extremely important to them when looking for a job. Instead, the group favored other factors such as the opportunity to learn and grow, the quality of their manager or management, and their interest in the type of work.19
Employers in a “work as fashion” future will need to go beyond simple responsiveness to gain a competitive edge. Survival in this future entails being thoughtful, action-oriented, and selective. Ways to accomplish this include:
Schneider Electric decided to implement an internal opportunity marketplace when it found that almost half the employees who left the organization did so because they felt it was difficult for them to find future growth opportunities within the company. The marketplace is used not to dictate career paths but to enable employees to take the initiative and own their careers. According to Andrew Saidy, Schneider’s vice president of Talent Digitization, Employer Branding and University Relations: “We’ve always told our employees that they own their careers, that they are in the driver’s seat.”25 Besides surfacing reskilling and upskilling opportunities, the company’s AI-based platform can guide workers to projects that align with their own purpose and goals.26
Being thoughtful and selective in responding to worker needs is necessary, but it’s not sufficient to thrive in this future. For that, employers need to build a sustainable and differentiated worker-employer relationship built around a core set of ideals that are important to both the worker and the employer. A sustainable relationship is one that lasts through shifts in worker sentiment and marketplace conditions, evolving with the times but always tying back to fundamentally constant values. And a differentiated relationship is one that is uniquely tailored to appeal to the workers the organization most needs to engage, regardless of what competitors are doing.
Waste Management is an example of an organization that is successfully considering its workers’ broader needs. Most recently, the company has demonstrated this by focusing on a perennially important issue: the ability to pay for a college education. After hearing from their employees how much of a burden this was, Waste Management launched “Your Tomorrow,” an education and upskilling program in partnership with Guild Education, in April 2021. Not only does the program offer the company’s nearly 36,000 US employees access to more than 170 fully funded programs—including undergraduate and graduate degrees, short-term technology and business certificates, and high school completion27—but the company is planning to expand it to cover its employees’ nearly 34,000 benefits-eligible dependents, including children and spouses, as well. As Tamla Oates-Forney, chief people officer for Waste Management, said, “It didn’t take long for us as a company to realize that [extending “Your Tomorrow” to families as well as employees] would be a key differentiator for us”: a commitment to workers that is an enduring part of the organization’s style.28
A sustainable, differentiated relationship is only partly about benefits, policies, and programs. Rather, it extends the consideration of worker needs to the broader workforce experience. Everything from well-being, personal and professional growth, and meaningful work is on the table. The relationship also can’t be one-sided. For an employer to be able to address the entire workforce experience, it needs to have an ongoing conversation with workers about what is important to them and why it matters. The point is to engage workers in a dialogue that gives the employer insight into what truly drives them, and that gives workers a meaningful voice about these deeper values.
In a “work as fashion” future, the pressures to respond and keep up with the pack can lead to an organization chasing its own tail as it instinctively responds to workers’ immediate requests and desires. Going past that entails being deliberate about where to invest in the employer brand, and creating a sustainable, differentiated relationship that grounds the worker-employer relationship in consistent and mutually valued ideals. Doing this makes an employer a trend setter in a world of fashion followers. As actress Lauren Hutton observed: “Fashion is what you’re offered four times a year by designers. Style is what you choose.”
“Fashion is what you’re offered four times a year by designers. Style is what you choose.” –Lauren Hutton
In a “war between talent” future, workers compete for limited jobs due to an oversupply of talent. The worker-employer relationship is IMPERSONAL: Employers view workers as interchangeable and easily replaceable, and workers are more concerned with competing with each other for jobs than with the quality of their relationship with their employer.
The “war between talent” future takes a mechanistic, supply-chain view of talent. It’s the embodiment of Taylorism, the embrace of scientific management to increase economic efficiency and labor productivity. In applying this approach to factory workers, Taylor is said to have deconstructed each job into the specific motions it required, determined which of these motions were essential, and timed workers’ execution with a stopwatch—all in the name of increasing the ratio of output to input.29
A combination of high talent supply and low government impact could create favorable conditions for a “war between talent” future.
It’s self-evident how a high talent supply can contribute to this
future. When the market is awash with qualified workers, employers can
find and retain workers simply because they are desperate for
employment. High salaries, attractive benefits, and a positive work
environment are less necessary than in the “work as fashion” future,
where employers compete for scarce workers by continually adjusting
their programs around workers’ expressed needs.
Low government impact would further exacerbate this dynamic. Labor laws and social safety nets in a “war between talent” future would be minimal or absent, unlike in a “work is work” future, where government worker protections are high. Regulations to limit employers’ ability to fire workers, set standards for minimum wages, keep jobs onshore, or require employers to provide a certain level of benefits will likely be spotty at best. Government-supported worker training and education programs would also be limited, exacerbating employers’ lack of investment in reskilling.
The result could be a free-for-all among employers to see who can take fullest advantage of the government’s lack of impact to reduce labor costs. Even today, we are seeing examples of employers lobbying governments to limit worker protections, a phenomenon that is playing out in regulations relative to gig workers around the world. And when workers operate outside the regulatory framework altogether, as do “ghost workers” who perform atomized tasks on an ad hoc basis, they are subject to poor working conditions and low incomes more often than not.
Navigating the “war between talent” future
The instinctive response to this future is to take the mechanistic view of talent to the extreme. Under this view, employers don’t just treat workers as interchangeable; they treat them as commodities, cogs of fixed value in which it is pointless to invest. The focus is not on “human” but on “resources,” with the prevailing employer ethos being to tap into those resources as cheaply and efficiently as possible. Employers pursuing this response will focus on accelerating trends that allow them to get work done in the most efficient way possible: globalize and offshore for labor arbitrage, digitize and automate to reduce headcount, and lean heavily on the alternative workforce to avoid the costs of employing people full time. They will also minimize investments in areas such as retention and reskilling: Because labor is so plentiful and cheap, these types of investments seem not worth making.
However, treating workers as commodities—eliminating investment in workers because it’s seen as an unnecessary cost—has long-term consequences that may be hard to undo. Leaders may assume that marketplace conditions and business needs will not shift, talent will always be plentiful, and the skills and capabilities one needs today will be the same as will be needed tomorrow. But that’s not the future we know is coming. Marketplace disruption has been accelerating for years. The pandemic brought this point home in a very big way: Sixty-four percent of the executives in our 2021 Global Human Capital Trends research said they need to be prepared for multiple, unlikely high-impact events, compared to just 29% before the pandemic.30 A case in point: In the United States, the unemployment rate fell from almost 15% in April 2020 to 5.8% in May 2021, taking us from an oversupply to an undersupply of talent in a matter of months.31
The certainty of change makes the instinctive response possibly the riskiest strategy in a disruptive world. These risks could include:
Commoditizing workers and competing on cost is a clear temptation in a “war between talent” future, but this should likely be done with caution. While cost management is important, an employer can pull ahead of others by making selective workforce investments in the areas that are most important to the organization. Actions to consider include:
Facing competition in hot growth markets for data center talent, a data storage organization sought to understand the competitive talent landscape and skills trends for technicians and engineers to differentiate their talent strategy. Leveraging global labor demand data and localized supply data, they developed insights for HR leaders and hiring managers around data center hiring trends, talent availability, and differentiating skills in the market. Based on the insights generated, the organization shifted its talent strategy to attract more outside-of-industry talent, re-focus job postings around the future-focused skills necessary to open their newest data center, and built a strategic talent framework to help define when the organization should engage contingent labor vs. employees.
The strategy for thriving in a “war between talent” future revolves around recognizing that workers deliver more value when they are respected and invested in. This may sound counterintuitive given that employers in this future view workers as interchangeable—but just because workers are interchangeable doesn’t mean they can’t be motivated to work harder and perform better. Even in a market with excess labor supply, investing in workers across the board will produce disproportionately better results. And if those investments include reskilling, it will better prepare employers for the future as well.
One way to enhance worker performance through investment is to create a “good jobs” environment in which job quality is high, workers have a voice, and the employer offers training and skill development.35 The motive is not altruism: Research shows that employers where “good jobs” prevail—jobs with higher wages, better hours, more predictable schedules—reap financial gains that put them ahead of competitors with less “good” jobs.36 This was as true back in 2012, when the recent Great Recession had spawned a glut of unemployed workers,37 as it is today, when a “good jobs” strategy continues to give organizations that adopt it a competitive edge.38
Though it’s important, there’s more to creating a good job than paying workers more. According to MIT researcher and author Zeynep Ton, “The economist’s [view is that] if you pay more, you attract a better talent pool, and then they work harder and that’s the outcome. But what I found in my research was [also that] companies designed the jobs in a way that enabled their employees to be more productive and contribute more to the company’s success.”39 Actions such as authorizing front-line workers to independently resolve customer problems, or giving on-the-ground workers the license and mandate to identify improvement opportunities, are examples.
QuikTrip, a US-based gas station/convenience store chain, and Mercadona, Spain’s largest supermarket chain, are two “good jobs” companies featured in Ton’s book The Good Jobs Strategy. Both stores pay store associates above-average wages, invest in training them, and empower them to solve problems on their own, including making merchandising decisions.40 The strategy is paying off for both companies. The cost of QuikTrip’s higher wages is offset by cost reductions elsewhere in the organization.41 And during the Great Recession of 2008 and 2009, Mercadona was able to cut prices by 10%,42 a move that has been attributed to greater worker productivity due to its “good jobs” environment.43
An example of a “good jobs” strategy that makes particular sense in a “war between talent” future is to develop education and career paths to move workers from areas of talent oversupply to areas of talent undersupply. Some retailers today are doing this by, for example, retraining cashiers to work in their health clinics. To support this kind of reskilling, employers can evaluate potential in their candidates and hire for it, even for commoditized jobs.
Thriving in a “war between talent” future may be a matter of focusing on improving outcomes instead of reducing costs. And improving outcomes means adopting strategies that motivate and develop workers—not for its own sake, but because it produces better results than strategies that commoditize workers. Though employers may have a slew of workers to choose from, those toward the “good jobs” end of the spectrum will be able to increase those workers’ value to the organization, and this will empower them to move ahead of the competition. Actor and amateur boxer Chuck Zito may have said it best: “You treat me good, I'll treat you better.”
“You treat me good, I'll treat you better.” –Chuck Zito
In a “work is work” future, workers and employers view organizational responsibility and personal and social fulfillment as largely separate domains. The worker-employer relationship is PROFESSIONAL: Each depends on the other to fulfill work-related needs, but both expect that workers will find meaning and purpose largely outside of work.
To be clear, workers still care about work in this future. In the context of their employment, they conscientiously do their jobs, and they expect their employer to provide fair compensation, paths to advancement, and learning and growth opportunities. What is less important is the degree to which people expect to find work fulfilling. People care about work and strive to perform well because it provides a livelihood and the means to pursue outside-of-work priorities. They see the rewards they gain from work—such as financial stability and time off—as enablers that allow them to pursue fulfillment elsewhere. They look to sources such as government, interest groups, and nonprofits to help advance their societal and community agendas, while turning to sources such as family, friends, and communities for emotional connection.
Low talent supply combined with high government impact could set the stage for a “work is work” future.
The pandemic led many workers to reflect deeply on what they need from work and from their employers, and in a world with low talent supply, workers are in a position to have employers respect those needs. And many workers may well have realized that their primary need is to place a certain distance between work and “life.” One reason for this may be the psychological impact of the pandemic. The frequent experience of working overtime to pick up the work of laid-off colleagues, or of suddenly feeling “always on” because of the workplace invading the home, has given many workers a new appreciation of finding space to invest in one’s personal interests and passions. In fact, the New York Times’ April 2021 feature “Welcome to the YOLO—You Only Live Once—economy” pointed out that many workers, “burned out and flush with savings” after a year-plus of the pandemic, are reevaluating their priorities and dedicating themselves to their passions, even if it means taking a professional risk.44
Growing evidence of health consequences of work may also lead workers to rethink their relationship with their jobs. A May 2021 World Health Organization study concluded that working 55 hours or more per week is “a serious health hazard.” The study noted that between 2000 and 2016, heart disease deaths associated with working long hours increased by 42%, and stroke deaths by 19%.45 In certain parts of Asia, some workers are actively revolting against the pressure to “work themselves to death” by adopting an ethos of “lying flat”—a movement that espouses lying down, both literally and metaphorically, instead of joining the “rat race” of professional advancement.46 In fact, well-being has been steadily rising in importance: Eighty percent of executive respondents in our 2020 Global Human Capital Trends research said that well-being was important or very important to their organization’s success, making it the top-ranked trend for that year.47
High government impact in the “work is work” future could reinforce this sense of detachment by lessening workers’ dependence on employers. In this future, government effectively addresses citizen needs such as health care, retraining, and even social justice—things that workers might otherwise expect from their employers. Workers who feel less of a personal or communal risk in terms of their own employability or seeing social justice done may feel less of a need to push their employers to address those issues.
The ability to psychologically separate work from “life” could be especially strong under governments that enact strong worker protections such as a universal living wage or “right to disconnect” legislation.48 Several European countries have already enacted such legislation, and Ireland has even enacted a “code of practice” extending the right to disconnect to cover remote work.49 Indeed, one 2019 Harvard Business Review article noted that the desire to find fulfillment in work is lower in European countries, whose governments are generally more active in worker-focused regulation, than in the United States, where worker protections are less prevalent.50
One interesting area to watch will be the role governments play in growing skills shortages around the world. In our 2020 Global Human Capital Trends research, 73% of our 9,000 global respondents identified organizations as the entity in society responsible for workforce development—far exceeding the responsibility of individuals themselves (54%) or governments (10%). Yet despite this expectation, only 16% of our respondents expected their organization to make a significant investment increase in this area and only 17% believed they could to a great extent anticipate the skills they would need in the next three years.51
As organizations find themselves unprepared to take sole responsibility for these mounting skills crises, some governments are stepping up to help. For instance, SkillsFuture Singapore (SSG) is a government-funded movement that provides Singaporeans with learning credits to empower citizens with access to education, training, and reskilling. SSG even offered aid to employers in hard-hit sectors during the COVID-19 pandemic. In 2020, 540,000 individuals and 14,000 enterprises benefitted from SkillsFuture programs.52
Similarly, in April 2021, England refreshed its government-sponsored training program to offer qualified individuals a free, fully funded college course. The refreshed program also makes higher education loans more flexible, allowing people to “space out their study across their lifetimes, take more high-quality vocational courses in further education colleges and universities, and to support people to retrain for jobs of the future.” The government also committed to invest more than £1.5 billion in college buildings and facilities.53
Navigating the “work is work” future
The instinctive response to a “work is work” future is to do nothing—to assume that the worker-employer relationship is fine and that no effort is needed to strengthen it. Operating under this assumption, employers would do little to build connections with workers or imbue the work with purpose and meaning, because they believe that the compartmentalization of work versus social and personal concerns means that the latter have no place in work. The approach is to simply avoid rocking the boat, confident that workers understand that when they’re at work, they’re there to work and nothing more.
If this view sounds familiar, it’s because it’s the way society has thought about work until the last decade. People considered the separation between work and life to be clear-cut and immutable. Organizations competed on “scalable efficiency,” pursuing standardization and economies of scale to push costs ever lower. In behavioral science terms, employers saw workers as “econs,” rational agents who would always gravitate toward maximal gain, rather than “humans,” beings with biases and emotions that play an enormous role in their decision-making.54 This led many organizations to deemphasize the emotional component of the worker-employer relationship, an approach that we now know is suboptimal for engagement and performance.
A “let it be” attitude toward the worker-employer relationship may seem like the rational and obvious course in a “work is work” future, but it can raise several risks:
A survival strategy in a “work is work” future, one that mitigates the risks raised by letting the worker-employer relationship manage itself, is to help workers separate their work from their personal lives while still cultivating their sense of comfort in the workplace—creating an inclusive environment where workers feel respected and treated fairly. It’s important because comfort is fundamental to establishing a sense of belonging, with 25% of the respondents to our 2020 Global Human Capital Trends research identifying comfort as the biggest driver of belonging.58 Steps to take could include:
A broader understanding of workforce needs could include looking at workforce segments that have traditionally been underserved or overlooked. Unilever is providing a leading example in their reimagination of employment models that will serve a broader set of worker preferences. In a new program called “U-Work,” Unilever is giving its workers “the freedom and flexibility associated with contract roles with the security and benefits typically linked to permanent roles.” Unilever employees who participate in U-Work do not have fixed roles but work on assignments. They get paid for each assignment but are free to do other things that are important to them between assignments. These U-Work workers receive a monthly retainer and are offered company benefits—whether they’re actively working on an assignment or not.60
Beyond these baseline tactics, gaining a greater competitive advantage in a “work is work” future depends on one paramount factor: motivating workers based on the merits of the work alone. Organizations that thrive will design work in ways that engage workers, so that workers do not shortchange work in favor of their outside-of-work priorities. The goal is to encourage workers to feel as invested in their work as they are in their personal lives so that they are inspired to do their best.
To accomplish this, re-architecting work to bring out human strengths becomes critical. When organizations design work with a primary focus on cost and treat workers as “econs,” they leave very little room for workers to bring human strengths such as relationship-building, creativity, and innovation to the fore. But when organizations shift their focus toward value and ultimately meaning, they create space for workers to unleash their potential at work in ways that benefit both the organization and the workers themselves. This means designing work so that workers know that their discretionary effort matters, their contributions to work outcomes are visible and meaningful, and that the work itself gives them the chance to grow professionally. In this way, work becomes connected not just to economic goals but to psychological satisfaction as well.
Making workers feel like their contribution matters takes the feeling of belonging beyond comfort. In our 2020 Global Human Capital Trends research, a plurality of our executive survey respondents (44%) identified contribution as the biggest driver of belonging at their organization.61
One way to show workers the value of their contributions is to emphasize outcomes in performance management, since outcomes speak more directly to a worker’s contributions toward organizational objectives. There’s evidence that the shift toward outcome-based performance management is already underway. More than 65% executives in our research for this special report agreed that they believed metrics would need to shift from capturing outcomes rather than outputs in the next five years. Executives also thought that outcome measures would also need to capture what workers want and value, not just the organization’s wants and values—outcomes such as well-being, diversity, and growth in skills.
A “work is work” future is not without its challenges. The re-architecture of work around human principles is of prime importance, since it’s the work itself that matters most in strengthening the worker-employer relationship. The biggest competitive advantage will accrue to employers that can make work engaging enough to inspire workers to do their best. As US president Teddy Roosevelt once said: “Work hard at work worth doing.”
“Work hard at work worth doing.”–Teddy Roosevelt
In a “purpose unleashed” future, purpose is the dominant force driving the relationship between workers and employers. The worker-employer relationship is COMMUNAL: Both workers and employers see shared purpose as the foundation of their relationship, viewing it as the most important tie that binds them together.
Purpose grounds organizations in a set of values, a North Star, that do not depend on circumstance. Those values, which sit at the intersection of economic, social, and human interests, serve as a benchmark against which actions and decisions can be weighed. In the face of circumstances that are difficult to predict and plan for, organizations that are steadfast in their purpose are able to infuse meaning into work to mobilize workers around common, meaningful goals.62
In this future, purpose is so important that it trumps the importance of the work itself. The centrality of purpose to employers’ relationships with workers pushes organizations further toward stakeholder capitalism, where social concerns and business concerns—purpose and profit—are equally important. An organization’s commitment to purpose becomes critical to its employment brand: It shapes everything from its ability to attract and retain workers to the extent to which workers experience meaning and fulfillment in their employment.
There’s evidence that this future could already be emerging. Over the past two years, 44% of millennials and 49% of Gen Zs said they have made choices over the type of work they are prepared to do and the organizations for which they are willing to work based on their personal ethics.63 In our research for this special report, when we asked executives what workers will increasingly value in the next five years, 86% predicted that they would value a meaningful mission and an opportunity to make an impact on that mission. One respondent observed: “An organization’s stance on key issues such as race, climate change, and others will become key components of the employee value proposition.” And purpose is important to worker engagement too: A recent Gartner survey found that when an organization acted on today’s social issues, the proportion of workers who were considered highly engaged increased from 40% to 60%.64
Organizations that see two forces in play—high talent supply and high government impact—may be operating in a “purpose unleashed” future.
When talent supply is high, employers can pick and choose workers not just for skills and capabilities, but for alignment with the organization’s purpose as well. Doing this adds an extra layer of commitment and connection to the worker-employer relationship, which can motivate workers to work harder and perform better on behalf of their employers.
High government impact supports employers’ ability to go “all in” on purpose. When the government deploys funding, resources, and other levers to address weighty issues of importance, it frees employers from obligations that might otherwise have been left to them to address. This in turn allows employers to design their own purpose agenda and pursue it with a singular focus, without being distracted by pressures to meet more basic needs. High government impact could also give organizations more opportunity to advance their purpose agenda in collaboration with government, further embedding it in everything they do.
Navigating the “purpose unleashed” future
When an employer’s relationship with workers revolves around purpose, the instinctive response might be to take vocal and visible stances on issues so that workers know what the employer is offering them. Communicating one’s purpose and the importance of that purpose becomes the number-one priority. Employers may appoint a chief purpose officer (CPO), make visible investments into their area of purpose, or build their marketing and PR campaigns around purpose as a way to not only build its external brand but to engage current and potential future workers.
However, this response may turn purpose into a surface-level activity, with communication outweighing commitment. This raises a number of risks:
Following the death of George Floyd last year, 53% of US workers said their companies made public commitments to address racial justice and equity issues. Today, 61% of those workers say their companies have not fulfilled all of their commitments. When asked about specific actions taken, the majority said the commitments have largely materialized through verbal and written messages (40%), whereas far fewer can point to dedication of company resources (27%); engaging customers, partners or suppliers in issues (23%); or allowing employee-run company events and campaigns (21%).65
As organizations shift from shareholder to stakeholder capitalism, their world becomes increasingly complicated and challenging. So, too, does the worker-employer relationship. To survive when this relationship is founded on purpose, an organization needs to live and breathe purpose; to integrate purpose into all that it is and everything it does. This doesn’t mean solving every societal problem or insisting that workers agree with every decision. But it does mean incorporating communal values and aspirations into every part of running the business: its operating model, governance structure, supply chain, recruitment and development programs, and marketing. This, not just external action, is what will convince workers that the organization’s commitment to purpose is genuine.
Employers can take several actions to help them do this well:
Organizations that engage their workers as co-creators of their purpose will be positioned to go beyond surviving to thriving. This is because co-creation—giving workers a meaningful voice in both defining and executing the organization’s purpose—elicits a sustainable sense of loyalty and connection that inspires workers to perform at their best. Co-creation goes beyond merely soliciting workers’ input; rather, it’s about workers having influence and decision rights over what the organization stands for, what outcomes it wants to achieve, and what actions it takes to pursue those outcomes. It’s about collaborating to find ways to build purpose into the work, tying purpose into what workers do every day. And it’s about encouraging a “creator’s mindset” in which workers know they have the agency to actively shape the organization’s purpose and feel highly invested in the organization as a result.66
Employers can pursue co-creation with workers in several ways, such as forming worker councils or “action committees,” or inviting workers to define success metrics. One way to give workers decision rights is to involve them in board discussions or even to name them to the board of directors outright. Delta Air Lines, for instance, convenes a team of on-contract employees who are invited to attend board meetings.67 Representing workers on boards could help organizations make purpose-driven decisions that help realize a financial benefit as well. A study of 560 public European companies shows that those where employees “have a seat on the supervisory board” do better than those that do not, including in operating profits, capital market valuation, employment development, and investments in capital assets and research and development.68
There’s a caveat, though. Both workers and employers must be committed to sharing decision-making power in real and meaningful ways. If workers have only a token say, and if leaders resist giving workers influence over decisions, efforts toward co-creation can be useless if not actively harmful. An illustrative case is the initial success and subsequent decline of one large company’s employee stock option (ESOP) plan. Marketplace value and employee engagement skyrocketed in the ESOP’s first year, during which workers actively participated with management in making day-to-day decisions. But the company’s workers and leaders had a long history of clashing with each other—and when they slid back into old behavior patterns, employee morale and company performance plummeted.69
Anheuser-Busch InBev (AB InBev) demonstrated co-creation with workers during the pandemic, when the organization quickly mobilized organizational resources to answer their communities’ immediate needs. The company asked employees to submit “ideas for good,” aligned to the company’s purpose and core principles, to aid the communities in which they worked. The idea to use AB InBev’s breweries to make hand sanitizers and to use its plastic injection molding machines to make private protective equipment for health care workers were two ideas born out of this program.
AB InBev is also taking an ecosystem approach to its social efforts, taking action to help clean the water they source to produce their beer, supporting the financial well-being of farmers whose crops they source, and helping make safe beer with indigenous crops for consumption in local communities. In this way, their aim is to operate in their ecosystems in a symbiotic manner, growing together with their suppliers, consumers, and communities instead of apart.70
Perhaps most important of all, employers should recognize that they still operate in a disruptive world. As a result, they will have to evolve their purpose to navigate a growing, evolving portfolio of complicated social, environmental, and marketplace issues. In a cocreative environment, this will require constant reengagement and renegotiation between workers and employers, which is a fundamental departure from the traditional worker-employer relationship.
Organizations that want to truly unleash purpose—to propel themselves forward through a purpose-based relationship with their workers—have to do more. Leaders must understand that being vocal about their purpose is not enough, and that advancing purpose through external action is only half the battle. Workers who know that purpose matters, that it guides their employer’s attitudes and interactions with them every single day, and that they have a voice not just in providing feedback but in shaping the organization’s path forward will bring the best of their passions to bear on their employer’s success. Says Starbucks’ Howard Schultz: “When you’re surrounded by people who share a passionate commitment around a common purpose, anything is possible.”
“When you’re surrounded by people who share a passionate commitment around a common purpose, anything is possible.”–Howard Schultz
The worker-employer relationship has no single future, only a multitude of possibilities. But examining the question in light of what could happen can help us better chart a course toward our chosen destination, the place where we ultimately want the worker-employer relationship to go. Without a clear course, without a point on the horizon to aim for, strategies for the evolution of the worker-employer relationship risk running in circles.
It’s hard to think about choosing a future destination when the here and now is so tumultuous. Yet it’s essential to look up from in-the-trees tactical concerns and the pressures of short-term survival to consider broader priorities and a longer timeframe. There’s more to nurturing a productive relationship with workers than the immediate question of how much flexibility to offer. And figuring out how to bring people back to the workplace is not the same as creating a sustainable workforce strategy. Building a worker-employer relationship that empowers an organization to thrive depends first and foremost on a clear, compelling vision for differentiating and sustaining that relationship.
What principles can help guide employers toward that vision? In our 2020 Global Human Capital Trends report, we called on organizations to embed the three attributes of purpose, potential, and perspective into their organizational DNA. It’s now time to embed those attributes into the human aspect of work, into all the ways that employers and workers engage with each other. What would the worker-employer relationship be like at an organization that imbues every aspect of work with purpose and meaning every day? How would it look at an organization that designs and organizes work to maximize the human potential for thinking, creating, and doing? What kind of relationship could foster a perspective that embraces a future orientation, asking not just how to optimize for today, but how to create value tomorrow, integrating our work, our lives, and our communities?
Again, there’s no single answer to these questions. Purpose, potential, and perspective may manifest in many different ways in different futures (figure 6). But at a deeper level, all of these manifestations share many common threads. Leadership, belonging, meaning, empowerment, the re-architecture of work—all these and more play into building a sustained, differentiated worker-employer relationship in any future. Most of these themes are not new. They have been evolving, as has the relationship between employers and workers over time. But in an unpredictable world, it’s the ability to apply purpose, potential, and perspective in whatever future comes to pass that positions an organization to thrive.
In a moment of choice and consequence, setting a bold destination for all organizational strategies—business, workforce, and social—is vital. The challenge before us now is to choose, with empathy and a deep understanding of what is possible, where that destination lies on both the current horizon and the next, and to navigate toward it with a steady hand.
Deloitte’s Human Capital professionals leverage research, analytics, and industry insights to help design and execute the HR, talent, leadership, organization, and change programs that enable business performance through people performance.